Bill Text: NY S00666 | 2023-2024 | General Assembly | Amended
Bill Title: Relates to licensing consumer debt collectors; sets minimum standards and regulations; establishes penalties for violations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2024-12-13 - PRINT NUMBER 666C [S00666 Detail]
Download: New_York-2023-S00666-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 666--C 2023-2024 Regular Sessions IN SENATE January 5, 2023 ___________ Introduced by Sen. KAVANAGH -- read twice and ordered printed, and when printed to be committed to the Committee on Banks -- reported favora- bly from said committee and committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- recommitted to the Committee on Banks in accordance with Senate Rule 6, sec. 8 -- reported favorably from said committee and committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the banking law and the civil practice law and rules, in relation to licensing consumer debt collectors The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The banking law is amended by adding a new article 7 to 2 read as follows: 3 ARTICLE VII 4 LICENSED CONSUMER DEBT COLLECTORS 5 Section 295. Definitions. 6 296. License required; entities exempt. 7 297. Application for license; fees. 8 298. Surety bond required. 9 299. Examination; books and records; reports. 10 300. Prohibited acts. 11 301. Regulations; minimum standards. 12 302. Application for acquisition of control of a consumer debt 13 collector. 14 303. Suspension and revocation. 15 304. Bad actors. 16 305. Penalties. 17 306. Preemption of local law. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD03040-17-4S. 666--C 2 1 § 295. Definitions. As used in this article: 2 1. "Affiliated company" means a consumer debt collector operating 3 under the control of a licensee, provided that the affiliated company 4 shares common facilities, management, and operations with the licensee 5 and the affiliated company does not engage in any collection activities 6 other than debt buying or debt collection for the licensee. 7 2. "Applicant" means a consumer debt collector who has filed an appli- 8 cation to obtain a license under this article. 9 3. "Attorney-at-law" and "law firm" means any attorney-at-law or law 10 firm retained by a client for the purpose of litigation and representing 11 such client through activities that may only be performed by a licensed 12 attorney, including acting pursuant to law or regulation by contacting a 13 consumer debtor in the course of the representation regarding antic- 14 ipated, pending, or previous litigation. 15 4. "Communication" and "communicate" means the conveying of informa- 16 tion regarding a consumer debt directly or indirectly to any person 17 through any medium. 18 5. "Consumer debt" means any obligation of a natural person for the 19 payment of money or its equivalent which arises out of a transaction 20 which was primarily for personal, family, or household purposes. The 21 term includes an obligation of a natural person who is a co-maker, 22 endorser, guarantor or surety of such a transaction. 23 6. "Consumer debtor" means any natural person who owes or is asserted 24 to owe any consumer debt. 25 7. "Consumer debt collector" means any person who engages in a busi- 26 ness, a principal purpose of which is consumer debt buying, or regularly 27 collecting or attempting to collect, directly or indirectly, consumer 28 debts: (a) owed or due or asserted to be owed or due to another person; 29 or (b) obtained by or assigned to such person that are in default when 30 obtained or acquired by such person. The term includes any creditor who, 31 in the process of collecting its own consumer debts, and uses any name 32 other than its own which would reasonably indicate that a third person 33 is collecting or attempting to collect a consumer debt. 34 8. "Control" means the possession, direct or indirect, of the power to 35 direct or cause the direction of the management and policies of a 36 person, whether through the ownership of voting securities, by contract, 37 except a commercial contract for goods or non-management services, or 38 otherwise. Control shall be presumed to exist if any person directly or 39 indirectly owns, controls or holds with the power to vote ten percent or 40 more of the voting securities of any other person. 41 9. "Creditor" means any person to whom a consumer debt is owed, due or 42 asserted to be due or owed, or any assignee for value of said person. 43 10. "Licensee" means a consumer debt collector that possesses one or 44 more licenses pursuant to this article. 45 11. "Person" means a natural person or any entity, including but not 46 limited to any partnership, corporation, limited liability company, 47 branch, agency, association, organization, any similar entity or any 48 combination of the foregoing acting in concert. 49 § 296. License required; entities exempt. 1. No person shall act with- 50 in this state as a consumer debt collector, directly or indirectly, 51 without first obtaining a license from the superintendent. A consumer 52 debt collector is acting within this state if it is physically located 53 in New York or if it is seeking to collect from any consumer debtor that 54 resides within this state. 55 2. No creditor, or the state or municipality of the state, may utilize 56 the services of a consumer debt collector to collect from a consumerS. 666--C 3 1 debtor that resides within this state unless the consumer debt collector 2 is licensed by the superintendent. 3 3. No person shall accept payments from consumer debtors on behalf of 4 a consumer debt collector acting within this state unless such consumer 5 debt collector is licensed by the superintendent. 6 4. The requirements of subdivisions one, two and three of this section 7 shall not apply to: 8 (a) any officer or employee of a licensed consumer debt collector when 9 attempting to collect on behalf of such consumer debt collector; 10 (b) any officer or employee of a creditor while in the name of the 11 creditor collecting debts for such creditor; 12 (c) any public officer acting in their official capacity; 13 (d) a person who is principally engaged in the business of servicing 14 loans or accounts which are not delinquent for the owners thereof when 15 in addition to requesting payment from delinquent consumer debtors, the 16 person provides other services including receipt of payment, accounting, 17 record-keeping, data processing services and remitting, for loans or 18 accounts which are current as well as those which are delinquent; 19 (e) any person while serving or making a bona fide attempt to serve 20 legal process on any other person in connection with the judicial 21 enforcement of any debt; 22 (f) any non-profit organization which, at the request of a consumer 23 debtor, performs bona fide consumer credit counseling and assists 24 customers in the liquidation of their debts by receiving payments from 25 such consumer debtors and distributing such amounts to creditors; 26 (g) any bank, trust company, savings banks, savings and loan associ- 27 ation, credit union, or foreign banking corporation, whether incorpo- 28 rated, chartered, organized or licensed under the laws of this state, 29 any other state, or the United States, any agency or division of the 30 federal government, or any insurer doing business under a license issued 31 under the insurance law; 32 (h) a subsidiary or affiliate of any bank, trust company, savings 33 banks, savings and loan association, credit union, or foreign banking 34 corporation, whether incorporated, chartered, organized or licensed 35 under the laws of this state, any other state, or the United States, any 36 agency or division of the federal government, or any insurer doing busi- 37 ness under a license issued under the insurance law, provided such 38 affiliate or subsidiary is not primarily engaged in the business of 39 purchasing and collecting upon delinquent debt, other than delinquent 40 consumer debt secured by real property; 41 (i) any person engaged in business, the principal purpose of which is 42 to regularly collect or attempt to collect debts owed or due or asserted 43 to be owed or due to another person where the debt is enforced for 44 child support, spousal support, maintenance or alimony, provided, howev- 45 er, that if such person also regularly collects or attempts to collect 46 debts other than those enforced for child support, spousal support, 47 maintenance or alimony, such person must comply with the requirements of 48 this article; 49 (j) any person while acting as a consumer debt collector for another 50 person, both of whom are related by common ownership or affiliated by 51 corporate control, if the person acting as a consumer debt collector 52 does so only for persons to whom it is so related or affiliated and if 53 the principal business of such person is not the collection of consumer 54 debts; 55 (k) any attorney-at-law or law firm;S. 666--C 4 1 (l) any person employed by a utility regulated under the provisions of 2 the public service law, acting for such utility; 3 (m) any person collecting or attempting to collect any consumer debt 4 owed or due or asserted to be owed or due another to the extent such 5 activity: (i) is incidental to a bona fide fiduciary obligation or a 6 bona fide escrow agreement; (ii) concerns a consumer debt which was 7 originated by such person; or (iii) concerns a consumer debt which was 8 not in default at the time it was obtained by such person as a secured 9 party in a commercial credit transaction involving the creditor; and 10 (n) any officer or employee of the United States, any state thereof or 11 any political subdivision of any state to the extent that collecting or 12 attempting to collect any debt owed is in the performance of their offi- 13 cial duties. 14 § 297. Application for license; fees. 1. (a) An application for a 15 license under this article shall be in writing, under oath, and in the 16 form prescribed by the superintendent and shall contain such information 17 related to the collection of consumer debts as the superintendent may 18 require. In addition to any other information required, the superinten- 19 dent shall require the following information, and shall, as appropri- 20 ate, require such information not only of the applicant but also of any 21 of its principals, partners, officers and directors, or any person or 22 entity controlling an interest greater than ten percent: 23 (i) the name and residence address of the applicant; 24 (ii) the business name, if other than the applicant; 25 (iii) the place, including the city, town or village, with the street 26 and number, where the business is to be located; 27 (iv) the business telephone of the applicant; 28 (v) the length of time that the applicant has been a consumer debt 29 collector; 30 (vi) a statement indicating whether the applicant has: 31 (A) been convicted of any crime or is a debtor on any unpaid civil 32 judgment relating to work as a consumer debt collector; and 33 (B) at any time in the past been issued a license pursuant to this 34 article, or has been issued a license for debt collection activities by 35 any other state or local authority, and if so, whether such license was 36 ever revoked or suspended; 37 (vii) a list of certifications issued to the consumer debt collector 38 by nonprofit trade associations; 39 (viii) unless the consumer debt collector is certified by a nonprofit 40 trade association recognized by the superintendent as having standards 41 that address the following requirements, a detailed description of the 42 business practices or methods used, or intended to be used, by the 43 applicant to confirm the validity of the debts it seeks to collect from 44 consumers; 45 (ix) unless the consumer debt collector is certified by a nonprofit 46 trade association recognized by the superintendent as having standards 47 that address the following requirements, a summary of the applicant's 48 record-keeping policy, including, but not limited to: 49 (A) the length of time the applicant maintains, or intends to main- 50 tain, records pertaining to consumers; and 51 (B) the manner in which the applicant records and stores, or intends 52 to record and store: consumer challenges to the validity of debt; bill- 53 ing errors; payments made by a consumer; settlement agreements; infor- 54 mation regarding parties responsible for debt; any statements made by a 55 consumer alleging that the debt arose from identity theft; and any 56 statements made by a consumer stating that the consumer received statu-S. 666--C 5 1 torily exempt income as defined in section fifty-two hundred twenty-two 2 of the civil practice law and rules; 3 (x) whether the applicant regularly sells, or intends to sell, consum- 4 er debts. If the applicant sells, or intends to sell consumer debts, 5 such applicant shall be required to provide the superintendent with a 6 summary of the applicant's policy with respect to the information 7 regarding a consumer's account that it transmits, or will transmit, to 8 the purchaser of a consumer debt, unless the consumer debt collector is 9 certified by a nonprofit trade association recognized by the superinten- 10 dent as having standards that address this requirement; 11 (xi) a sworn statement by the applicant that the information set forth 12 in the application is current and accurate; and 13 (xii) the name of each affiliated company the applicant wishes to 14 include on the license. 15 (b) The superintendent may reject an application for a license or an 16 application for the renewal of a license if such superintendent is not 17 satisfied that the financial responsibility, character, reputation, 18 integrity and general fitness of the applicant and of the owners, part- 19 ners or members thereof, if the applicant be a partnership or associ- 20 ation, and of the officers and directors, if the applicant be a corpo- 21 ration, are such as to command the confidence of the public and to 22 warrant the belief that the business for which the application for a 23 license is filed will be operated lawfully, honestly and fairly. 24 2. At the time of making the application for a license, the applicant 25 shall pay to the superintendent a fee as prescribed pursuant to section 26 eighteen-a of this chapter for each proposed location, for investigating 27 the application. 28 3. In addition to any other fee imposed on an applicant or licensee, 29 every licensee shall pay to the superintendent the sums provided to be 30 paid under the provisions of section two hundred six of the financial 31 services law. 32 4. The license shall be for a period of two years as of the first of 33 January each year, or such other date as determined by the superinten- 34 dent by regulation. 35 5. Each license shall plainly state the name of the licensee and the 36 city or town with the name of the street and number, if any, of the 37 place where the business is to be carried on. A licensee shall not 38 change the location where the business of the licensee is to be carried 39 on without first providing written notice to the superintendent. The 40 relocation notice shall be in writing setting forth the reason for the 41 relocation, and shall be accompanied by a relocation investigation fee 42 to be determined pursuant to section eighteen-a of this chapter. 43 6. The business shall at all times be conducted in the name of the 44 licensee as it appears on the license and in no other name, including a 45 shortened or abbreviated version thereof. The superintendent may permit 46 affiliated companies to be under a single license and subject to a 47 single examination as long as all of the affiliated company names are on 48 the license. 49 7. The license shall not be transferable nor assignable. 50 8. The superintendent may participate in a multi-state licensing 51 system for the sharing of regulatory information and for the licensing 52 and application, by electronic or other means, of entities engaged in 53 the business of consumer debt collection. The superintendent may estab- 54 lish requirements for participation by an applicant in a multi-state 55 licensing system which may vary from the provisions of this section. The 56 superintendent may require a background investigation of each applicantS. 666--C 6 1 for a consumer debt collector license by means of fingerprint, which 2 shall be submitted by all applicants simultaneously with an application 3 and which the superintendent may submit to the division of criminal 4 justice services and the federal bureau of investigation for state and 5 national criminal history record checks. If the applicant is a partner- 6 ship, association, corporation or other form of business organization, 7 the superintendent may require a background investigation for each 8 member or shareholder holding more than five percent ownership, board 9 director and principal officer of the applicant and any individual 10 acting as a manager of an office location. The applicant shall pay 11 directly to the multi-state licensing system any additional fees relat- 12 ing to participation in the multi-state licensing system. 13 9. The superintendent shall issue each consumer debt collector a 14 unique license number. 15 10. The department shall maintain and publish a registry of all 16 licensed consumer debt collectors, which shall list and identify, all 17 licensed consumer debt collectors doing business in this state. The 18 department shall make the registry available on its website. 19 11. Each consumer debt collector engaged in collecting consumer debts 20 shall communicate their license number upon the request of any inter- 21 ested party. Any advertisement, letterhead, receipt or other printed 22 matter of a licensee must contain the license number assigned to the 23 licensee by the department. Such license number shall be clearly and 24 conspicuously displayed in no less than a ten-point font. 25 12. No person shall: (a) present, or attempt to present, as their or 26 its own, the license number of another; 27 (b) knowingly give false evidence of a material nature to the depart- 28 ment for the purpose of procuring a license; 29 (c) falsely represent themselves to be a licensed consumer debt 30 collector; 31 (d) use or attempt to use a license which has expired; 32 (e) offer to perform or perform any collection of consumer debts with- 33 out having a current license as is required under this article; or 34 (f) represent in any manner that their or its license constitutes an 35 endorsement of the quality of workmanship or competency of the consumer 36 debt collector. 37 § 298. Surety bond required. 1. (a) A consumer debt collector shall be 38 required to file and maintain in force a surety bond, issued by a domes- 39 tic insurer, as a condition precedent to the issuance or renewal and 40 maintenance of a license under this article. 41 (b) The bond shall be for the benefit of creditors who obtain a judg- 42 ment from a court of competent jurisdiction based on the failure of the 43 consumer debt collector to remit money collected on account and owed to 44 the creditor. The bond shall also be for the benefit of consumer 45 debtors or the attorney general seeking restitution for consumer debtors 46 when such consumer debtor or the attorney general obtains judgment from 47 a court of competent jurisdiction based on a violation by the consumer 48 debt collector of the federal Fair Debt Collection Practice Act or any 49 other New York law or federal law regulating consumer debt collection 50 which is applicable to the consumer debt collector if such judgment has 51 not been paid within six months, except if the decision is under appeal. 52 (c) The bond shall be in a form prescribed by the superintendent in a 53 sum based on the gross profit reported to the Internal Revenue Service 54 for the previous year by such consumer debt collector as follows: 55 (i) ten thousand dollars for consumer debt collectors that reported a 56 gross profit of less than two hundred fifty thousand dollars;S. 666--C 7 1 (ii) twenty-five thousand dollars for consumer debt collectors that 2 reported a gross profit of two hundred fifty thousand dollars or more; 3 (iii) fifty thousand dollars for consumer debt collectors that 4 reported a gross profit of five hundred thousand dollars or more; 5 (iv) seventy-five thousand dollars for consumer debt collectors that 6 reported a gross profit of seven hundred fifty thousand dollars or more; 7 (v) one hundred thousand dollars for consumer debt collectors that 8 reported a gross profit of one million dollars or more. 9 (d) The bond shall be continuous in form and run concurrently with the 10 original and each renewal license period unless terminated by the insur- 11 ance company. An insurance company may terminate a bond and avoid 12 further liability by filing a notice of termination with the department 13 sixty days prior to the termination and at the same time sending the 14 same notice to the consumer debt collector. 15 2. A license shall be automatically cancelled on the termination date 16 of the bond unless either (a) a new bond is filed with the department to 17 become effective at the termination date of the prior bond, or (b) the 18 licensed entity provides the superintendent a refundable deposit in lieu 19 of the bond while the consumer debt collector pursues a new bond. 20 3. If a license has been cancelled under this section, the consumer 21 debt collector must file a new application to obtain a license and will 22 be considered a new applicant if it obtains a new bond. 23 4. For the purposes of this section the term "domestic insurer" shall 24 have the same meaning as given in section one hundred seven of the 25 insurance law. If a bond required by this section is not reasonably 26 available from a domestic insurer the superintendent may, in their 27 discretion, permit, on a case by case basis or by order, consumer debt 28 collectors to obtain the bond required by this section from such other 29 entities licensed by the department as the superintendent deems appro- 30 priate. 31 § 299. Examination; books and records; reports. 1. For the purpose of 32 enforcing the provisions of this article and for ensuring the safe and 33 sound operation of the consumer debt collector business, the superinten- 34 dent may at any time, and as often as may be determined, either 35 personally or by a person duly appointed by the superintendent, investi- 36 gate the loans, business, business practices, and business methods of 37 any consumer debt collector, and examine the books, accounts, records, 38 and files used therein of every licensee. 39 2. The superintendent and duly designated representatives and law 40 enforcement officials whose presence is requested by the superintendent 41 shall have free access to the offices and place of business, books, 42 accounts, papers, records, audio recordings, files, safes and vaults of 43 all such licensees wherever located. The superintendent shall have 44 authority to require the attendance of and to examine under oath all 45 persons whomsoever whose testimony may be required relative to such 46 consumer debts, including the purchase, sale and collection thereof, as 47 well as payment processing on such consumer debts, and related business. 48 3. The superintendent may also address to a licensee, or the officers, 49 employees or agents thereof, any inquiry in relation to its trans- 50 actions, operations, or conditions, or any matter connected therewith. 51 Every person so addressed shall reply in writing to such inquiry prompt- 52 ly and truthfully, and such reply shall be, if required by the super- 53 intendent, subscribed by such individual, or by such officer or officers 54 of a corporation, as the superintendent shall designate, and affirmed by 55 them as true under the penalties of perjury.S. 666--C 8 1 4. Each licensee shall keep and use in its business such books, 2 accounts, and records as will enable the superintendent to determine 3 whether such licensee is complying with the provisions of this article 4 and with the rules and regulations promulgated hereunder. Every licen- 5 see shall keep recordings of consumer collection calls and make such 6 recordings available to the superintendent upon request. Every licensee 7 shall preserve such books, accounts, and records, for at least five 8 years after making the final entry regarding a consumer debt. Preserva- 9 tion of photographic reproduction thereof or records in photographic 10 form, including an optical disk storage system and the use of electronic 11 data processing equipment that provides comparable records to those 12 otherwise required and which are available for examination upon request 13 shall constitute compliance with the requirements of this section. 14 5. Each licensee shall annually, on or before April first, file a 15 report with the superintendent giving such information as the super- 16 intendent may require concerning the business and operations during the 17 preceding calendar year of each licensed place of business conducted by 18 such licensee within the state under authority of this article. Such 19 report shall be subscribed and affirmed as true by the licensee under 20 the penalties of perjury and shall be in the form prescribed by the 21 superintendent. 22 6. In addition to annual reports, the superintendent may require such 23 additional regular or special reports as may be deemed necessary to the 24 proper supervision of licensees under this article. Such additional 25 reports shall be in the form prescribed by the superintendent and shall 26 be subscribed and affirmed as true under the penalties of perjury. 27 7. The expenses of every examination of the affairs of a consumer debt 28 collector subject to this section shall be borne and paid by the licen- 29 see. 30 § 300. Prohibited acts. 1. No consumer debt collector that is required 31 to be licensed under this article shall engage in unfair, unconsciona- 32 ble, deceptive, false, misleading, abusive, or unlawful acts or prac- 33 tices. 34 2. Without limiting the general application of the prohibited acts in 35 subdivision one of this section, it shall be unlawful for any consumer 36 debt collector to: 37 (a) engage in any act or practice which would be a material violation 38 of the federal Fair Debt Collection Practices Act, any other New York 39 law or federal law regulating consumer debt collection, or any act or 40 practice which would be prohibited under section six hundred one of the 41 general business law if the consumer debt collector was a principal 42 creditor or their agent; 43 (b) engage or retain the services of any person who, being required to 44 be licensed under this article, does not have a valid license issued by 45 the department; or 46 (c) cause any act to be done which violates this section. 47 3. No consumer debt collector licensed under this article shall: 48 (a) without the prior written or recorded consent of the consumer 49 debtor given directly to the creditor or consumer debt collector or the 50 express permission of a court of competent jurisdiction, a consumer debt 51 collector may not communicate with a consumer debtor in connection with 52 the collection of any consumer debts: 53 (i) at any unusual time or place or a time or place known or which 54 should be known to be inconvenient to the consumer debtor. In the 55 absence of knowledge of circumstances to the contrary, a consumer debt 56 collector shall assume that the convenient time for communicating with aS. 666--C 9 1 consumer debtor is after eight o'clock antemeridian and before nine 2 o'clock postmeridian, local time at the consumer debtor's location. 3 Unless the consumer debtor is known to be in another time zone, the 4 consumer debt collector can rely on the local time of the area code 5 dialed in determining the convenient time for communication; 6 (ii) if the consumer debt collector knows the consumer debtor is 7 represented by an attorney with respect to such consumer debt and has 8 knowledge of, or can readily ascertain, such attorney's name and 9 address, unless the attorney fails to respond within a reasonable period 10 of time to a communication from the consumer debt collector or unless 11 the attorney consents to direct communication with the consumer debtor; 12 (iii) at a place known to be the consumer debtor's place of employment 13 unless the consumer debtor is self-employed; 14 (iv) more than two times by telephone in a seven day period unless 15 returning a call made at the consumer debtor's request; 16 (v) by voicemail on to any telephone that is known or which reasonably 17 should be known may be received by someone other than the consumer 18 debtor; or 19 (vi) by means of electronic communications, including but not limited 20 to SMS text message, messaging applications on mobile telephones, elec- 21 tronic mail, Facebook, and other forms of social media, except as 22 authorized by 12 CFR Part 1006 or by the superintendent in regulations. 23 (b) communicate with a consumer debtor by postcard; 24 (c) continue communication with a consumer debtor after the consumer 25 debt collector's first communication if the consumer debt collector 26 fails to send the consumer debtor a notice in writing within five days 27 of that first communication, which such notice shall be promulgated by 28 the superintendent; 29 (d) continue to communicate with a consumer debtor about a consumer 30 debt that the consumer debtor disputes without providing the consumer 31 debtor with data or documents that verify the disputed consumer debt; or 32 (e) utilize a service or technology that intentionally causes the 33 telephone network to indicate to the receiver of a call that the origi- 34 nator of the call is a station other than the true originating station 35 for the purpose of collecting a consumer debt. 36 § 301. Regulations; minimum standards. The superintendent may promul- 37 gate rules and regulations giving effect to the provisions of this arti- 38 cle. Such rules and regulations may include but shall not be limited to 39 the establishment of minimum standards to be observed by consumer debt 40 collectors acting within this state and further defining acts and prac- 41 tices which are unfair, unconscionable, deceptive, false, misleading, 42 abusive, or unlawful under section three hundred of this article. 43 § 302. Application for acquisition of control of a consumer debt 44 collector. 1. No person shall acquire control of a licensee under this 45 article without the prior approval of the superintendent. 46 2. Any person desirous of acquiring such control shall make written 47 application to the superintendent, such application shall be in such 48 form and shall contain such information, including the information 49 required under section two hundred ninety-seven of this article, as the 50 superintendent may require and such person, at the time of making such 51 application if not licensed, shall pay to the superintendent an investi- 52 gation fee as prescribed pursuant to section eighteen-a of this chapter. 53 3. In determining whether to approve or deny an application under this 54 section, the superintendent shall consider: 55 (a) whether the financial responsibility, experience, character, and 56 general fitness of the person seeking to acquire control, and of theS. 666--C 10 1 members thereof if such person be a partnership or association, and of 2 the officers, directors and controlling stockholders thereof if such 3 person be a corporation, are such as to command the confidence of the 4 community and to warrant belief that the business will be operated 5 honestly, fairly, and efficiently within the purpose of this article; 6 (b) the effect the acquisition may have on competition; and 7 (c) whether the acquisition may be hazardous or prejudicial to consum- 8 er debtors or creditors in this state. 9 4. If no such application has been made prior to the acquisition of 10 control, the license for each place of business maintained and operated 11 by the licensee shall, at the discretion of the superintendent, become 12 null and void and each such license shall be surrendered to the super- 13 intendent. 14 § 303. Suspension and revocation. 1. In addition to any other power 15 provided by law, the superintendent may suspend or revoke the license of 16 a consumer debt collector, if after notice and an opportunity to be 17 heard, the superintendent finds that a consumer debt collector has: 18 (a) committed any fraud, engaged in any dishonest activities or made 19 any misrepresentation; 20 (b) materially violated any provisions of this chapter or any regu- 21 lation issued pursuant thereto, or has materially violated any other law 22 in the course of its or their dealings as a consumer debt collector; 23 (c) made a false statement or material omission in the application for 24 or renewal of a license under this article or failed to give a true 25 reply to a question in such application; or 26 (d) demonstrated incompetency or untrustworthiness to act as a consum- 27 er debt collector. 28 2. The department shall before revoking or suspending any license and 29 at least fifteen days prior to the date set for the hearing, and upon 30 due notice to the complainant or objector, notify in writing the holder 31 of such license, of any charge made and shall afford such licensee an 32 opportunity to be heard in person or by counsel in reference thereto. 33 Such written notice may be served personally to the licensee, or by 34 certified mail to the last known business address of such licensee. 35 § 304. Bad actors. 1. In addition to any other power provided by law, 36 the superintendent may require any licensee to remove any director, 37 officer or employee or to refrain from engaging or retaining any inde- 38 pendent contractor or service provider if such director, officer, 39 employee, independent contractor or service provider has themselves had 40 a license under this chapter suspended or revoked, or has caused the 41 licensee to violate any provision of this chapter or regulations promul- 42 gated thereunder. 43 2. No person that is the subject of an order under this section remov- 44 ing them as a director, officer or employee or preventing a licensee 45 from engaging or retaining them as an independent contractor or service 46 provider, shall become engaged with any licensee without obtaining the 47 prior written approval of the superintendent. Nor shall such person fail 48 to disclose that it is the subject of an order under this section to any 49 licensee for which it is acting or seeking to act as a director, offi- 50 cer, employee, independent contractor or service provider. 51 3. Any consumer debt collector or entity claiming to be a consumer 52 debt collector that is not licensed pursuant to this article and know- 53 ingly conducts business involving consumer debt collection shall be 54 required to pay a civil penalty to the department of not more than the 55 lesser of five hundred dollars per attempt to collect a consumer debt orS. 666--C 11 1 one hundred thousand dollars in total damages in violation of this arti- 2 cle. 3 § 305. Penalties. 1. In addition to such penalties as may otherwise be 4 applicable by law, including but not limited to the penalties available 5 under section forty-four of this chapter, the superintendent may require 6 a person operating as a consumer debt collector without a license to pay 7 a civil penalty to the department a sum not to exceed five hundred 8 dollars per attempt to collect a consumer debt in violation of this 9 article. 10 2. Whenever it appears to the attorney general, either upon complaint 11 or otherwise, that any person has engaged in any of the acts or prac- 12 tices stated to be unlawful under this article, the attorney general may 13 bring an action or special proceeding in the name and on behalf of the 14 people of the state of New York to enjoin any violation of this article, 15 to obtain restitution of any moneys or property obtained directly or 16 indirectly by any such violation, to obtain disgorgement of any profits 17 obtained directly or indirectly by any such violation, and to obtain 18 civil penalties of not more than the lesser of five hundred dollars per 19 attempt to collect a consumer debt or one hundred thousand dollars in 20 total damages in violation of this article. 21 3. Nothing in this article shall limit any statutory or common-law 22 right of any person to bring any action in any court for any act, or 23 the right of the state to punish any person for any violation of any 24 law. 25 § 306. Preemption of local law. 1. Except as provided in subdivision 26 two of this section, jurisdiction in all matters pertaining to licensed 27 consumer debt collectors is, by this article, vested exclusively in the 28 state. 29 2. Any local law or ordinance of any city with a population of one 30 million or more, which is inconsistent with the provisions of this arti- 31 cle or any rules or regulations promulgated hereunder shall not be 32 preempted if such local law or ordinance provides consumer debt 33 collection procedures equal to or greater than the provisions of this 34 article or any rules or regulations promulgated hereunder, and such city 35 files with the department a written declaration of its intent to admin- 36 ister and enforce such local law or ordinance which is approved by the 37 superintendent. 38 § 2. Subdivision 10 of section 36 of the banking law, as amended by 39 section 2 of part L of chapter 58 of the laws of 2019, is amended to 40 read as follows: 41 10. All reports of examinations and investigations, correspondence and 42 memoranda concerning or arising out of such examination and investi- 43 gations, including any duly authenticated copy or copies thereof in the 44 possession of any banking organization, bank holding company or any 45 subsidiary thereof (as such terms "bank holding company" and "subsid- 46 iary" are defined in article three-A of this chapter), any corporation 47 or any other entity affiliated with a banking organization within the 48 meaning of subdivision six of this section and any non-banking subsid- 49 iary of a corporation or any other entity which is an affiliate of a 50 banking organization within the meaning of subdivision six-a of this 51 section, foreign banking corporation, licensed lender, licensed casher 52 of checks, licensed mortgage banker, registered mortgage broker, 53 licensed mortgage loan originator, licensed sales finance company, 54 registered mortgage loan servicer, licensed student loan servicer, 55 licensed insurance premium finance agency, licensed transmitter of 56 money, licensed budget planner, licensed consumer debt collector, anyS. 666--C 12 1 other person or entity subject to supervision under this chapter, or the 2 financial services law or the insurance law, or the department, shall be 3 confidential communications, shall not be subject to subpoena and shall 4 not be made public unless, in the judgment of the superintendent, the 5 ends of justice and the public advantage will be subserved by the publi- 6 cation thereof, in which event the superintendent may publish or author- 7 ize the publication of a copy of any such report or any part thereof in 8 such manner as may be deemed proper or unless such laws specifically 9 authorize such disclosure. For the purposes of this subdivision, 10 "reports of examinations and investigations, and any correspondence and 11 memoranda concerning or arising out of such examinations and investi- 12 gations", includes any such materials of a bank, insurance or securities 13 regulatory agency or any unit of the federal government or that of this 14 state any other state or that of any foreign government which are 15 considered confidential by such agency or unit and which are in the 16 possession of the department or which are otherwise confidential materi- 17 als that have been shared by the department with any such agency or unit 18 and are in the possession of such agency or unit. 19 § 3. Paragraph (a) of subdivision 1 of section 44 of the banking law, 20 as amended by section 4 of part L of chapter 58 of the laws of 2019, is 21 amended to read as follows: 22 (a) Without limiting any power granted to the superintendent under any 23 other provision of this chapter, the superintendent may, in a proceeding 24 after notice and a hearing, require any safe deposit company, licensed 25 lender, licensed casher of checks, licensed sales finance company, 26 licensed insurance premium finance agency, licensed transmitter of 27 money, licensed mortgage banker, licensed student loan servicer, regis- 28 tered mortgage broker, licensed mortgage loan originator, registered 29 mortgage loan servicer, licensed consumer debt collector or licensed 30 budget planner to pay to the people of this state a penalty for any 31 violation of this chapter, any regulation promulgated thereunder, any 32 final or temporary order issued pursuant to section thirty-nine of this 33 article, any condition imposed in writing by the superintendent in 34 connection with the grant of any application or request, or any written 35 agreement entered into with the superintendent. 36 § 4. The opening paragraph of subdivision (a) of section 3218 of the 37 civil practice law and rules, as amended by chapter 311 of the laws of 38 1963, is amended to read as follows: 39 Except as provided in section thirty-two hundred one of this article 40 and subdivision (e) of this section, a judgment by confession may be 41 entered, without an action, either for money due or to become due, or to 42 secure the plaintiff against a contingent liability in behalf of the 43 defendant, or both, upon an affidavit executed by the defendant; 44 § 5. Section 3218 of the civil practice law and rules is amended by 45 adding a new subdivision (e) to read as follows: 46 (e) Prohibition on certain judgments by confession. 1. No judgment of 47 confession may be entered on: (i) any amount due from one or more indi- 48 viduals for personal, family, household, consumer, investment or non-bu- 49 siness purposes; 50 (ii) any amount under two hundred fifty thousand dollars due from any 51 person for any purpose; or 52 (iii) any amount due from any person that either: (A) is currently not 53 a resident of the state, (B) was not a resident of the state at the time 54 the affidavit authorizing the entry of the judgment of confession was 55 executed, or (C) if not a natural person, does not have a place of busi- 56 ness in the state or did not have a place of business in the state atS. 666--C 13 1 the time the affidavit authorizing the entry of the judgment of 2 confession was executed. 3 2. Paragraph one of this subdivision shall not apply to a judgment by 4 confession entered or sought to be entered by the state, a domestic 5 municipal corporation or any public officer acting in their official 6 capacity. 7 § 6. The civil practice law and rules is amended by adding a new 8 section 5022 to read as follows: 9 § 5022. Judgments obtained from unlicensed consumer debt collectors. 10 Any judgment obtained against a consumer debtor by, or on behalf of, a 11 consumer debt collector acting without a license from the superintendent 12 of the department of financial services, when such license is required, 13 in violation of section two hundred ninety-six of the banking law, shall 14 be null and void. 15 § 7. This act shall take effect on the one hundred eightieth day after 16 it shall have become a law; provided, however that sections one, two and 17 three of this act shall take effect January 1, 2027. The superintendent 18 of financial services shall allow any consumer debt collector which 19 submits an application prior to January 1, 2027 to operate pending the 20 approval or denial of the application. Effective immediately, the addi- 21 tion, amendment and/or repeal of any rule or regulation necessary for 22 the implementation of this act on its effective date are authorized to 23 be made and completed on or before such effective date. This act shall 24 not affect the validity of any civil actions or arbitrations commenced 25 or judgments entered prior to January 1, 2027.
